A critical source of competitive advantage for organizations across the globe Envisaged as consisting of critical goals and means for organizing work and people Need to be aligned with business strategies, situational constraints and organizational values- Beer et.al(1984) Affect the organizations chances of survival and its relative performance HR SYSTEMS & STRATEGY SHRM: Typically variegated HR systems and models may be unique at different levels with in an organization Mostly planned but some of them are emergent in nature
Proposed by Robert & Kaplan in 1992 as a tool for improving performance Today perceived as a strategic planning and management system to align business activities to: The vision and strategy of the organization Improve internal and external communications Monitor organization performance against strategic goals
A desirable BSC should be the right amalgamation of leading and lagging indicators. Lag: Performance measures focusing on results at the end of a time period Lead: Performance measures that drive or lead to the performance of lag measures
Objective: To build a model that integrates SHRM initiatives in the BSC framework. Data Analysis: Exploratory and descriptive Qualitative Sample: 3 organizations drawn from different sectors Data Representation: Case Study Approach
Mobil Oil increased cash flow by $1.2 billion and ROI from 6% to 16% between years 2 and 5 after implementing BSC UPS (United Parcel Service) increased revenues by 9% and net income by 33% within 2 years after BSC implementation Wells Fargo Bank increased its customer base by 450% after 3 years of BSC implementation Chemical Bank increased its group company profits 20- fold over a 4-year period after BSC implementation The world famous advertising firm Saatchi and Saatchi achieved a five-fold increase in market capitalization within 3 years of implementation of BSC Texaco Refining and Marketing increased profitability by $29 million & 1,500% return on investment from their BSC initiative
Implemented BSC in 2001 STAGE 1 Expansion of financial perspective; growth, market share, profitability & credit costs Concept of customer service levels as an area of performance evaluation Focus on building a process perspective in the organization Re-skilling of existing employees and speed to job of new recruits STAGE 2 Further detailing and development of process & customer initiatives Specific measures of performance introduced: Branch service quality scores Turn around time (TAT) benchmarks Good order index for client bankers Focused measures for achieving financial goals STAGE 3 Learning & Development perspective that included building leadership pool etc Introduction of Scorecards for new locations outside India
Linked the customer information system and the central reservation system Expandable Capable of integrating other standalone warehouses Managers to narrow down to 25 main objectives of the organization Select 60 key projects out of 150 existing ones Helped Solved the basic purpose of communication gaps Removed chaos and confusion Forced objective owners to be clear, articulate and transparent in their processes Benefits
The initiative to implement the BSC system came from the top management at its headquarters in the Netherlands. All the subsidiaries were instructed by their quality departments about the implementation. An interesting concept of traffic light system was adopted by the management of Philips Strengthened their communication strategy across Philips divisions Enabled the employees to understand policies and plans for future in a more comprehensive way Restructured the organization in a more strategic manner but also helped the company to integrate its earlier initiatives Benefits
SMEs should also implement BSC BSC should be in their priority list and not utopian list Dont have a problem of integrating already diversified cultures and businesses Focus on creating a strategic vision and set of objectives for the business Less complex environment -quicker implementation ADVANTAGES
Companies implementing BSC have an underlying essence that employees need to be an integral part of their strategy Organization needs to communicate its goal, vision and mission to its employees to achieve performance par excellence Each perspective of the BSC act as a building block for the following Learning & Development - Base of the building
Just as firms will be faced with inefficiencies when they try to implement new strategies with outmoded structures, so they will also face problems of implementation when they attempt to effect new strategies with inappropriate HR systems. The critical management task is to align the formal structure and the HR systems so that they drive the strategic objectives of the organization - Fombrum et al (1984)
Organizations culture and structure play a very important role in shaping that strategy EXTERNALLY -Market factors call for organizations to adapt instantaneously to ever changing environment INTERNALLY -Organizations need to change and evolve quickly that leads to building employee knowledge, competencies and skills Employee development has recently received its due importance Evident with the types of performance measures used: Number of employees trained Testing scores Imbibing Learning culture in organizations is the latest trend
TRAINING & DEVELOPMENT Employees are converted to become better assets by honing their: Attitude Skills Knowledge LEARNING Creating employee- focused resources (e-learning) Creating libraries for employees Holding workshops OTHERS Encouraging Innovation & Empowerment Providing Career opportunities
The suggested model gives a holistic & comprehensive view of the organization and its vision It can not only build new objectives & targets for the organization but also easily integrates the traditional assessment tools of the organization Effectively used if its foundation is built on robust HR processes and initiatives that nurture organizations talent pool NOTE: This exploratory study highlights best practices of implementation of BSC. Organizations are advised to ascertain their own best fit following the suggested model for successful implementation of BSC.
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